Accounting Policies of Super Sales India Ltd. Company
Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of accounting and preparation of financial statements
(i) Compliance with Ind AS
The financial statements of the Company comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
The financial statements up to year ended 31st March, 2017 were prepared in accordance with the Accounting Standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.
These financial statements are the first financial statements of the company under Ind AS. Refer note 37 and 38 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.
(i) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
- certain financial assets and liabilities (that are measured at fair value);
- defined benefit plans - plan assets measured at fair value;
2. Use of estimates
The preparation of the financial statements in conformity with Indian Accounting Standards (Ind AS) requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.
3. Inventories
Raw materials, stores and spares, work in progress and finished goods are valued at lower of cost and net realisable value after providing for obsolescence and other losses wherever considered necessary. Cost is determined on weighted average basis. Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate allocation of variable and fixed overhead expenditure and also other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
4. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial instruments (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss. Subsequently, financial instruments are measured according to the category in which they are classified.
5. Financial assets
5.1. Classification of financial assets
Classification of financial assets depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss), and
- those measured at amortised cost Debt instruments
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
- Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely, payments of principal and interest are measured at amortised cost. A gain or loss on a debt instrument that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
- Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the cash flows of the assets represent solely, payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
- Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt instrument that is subsequently measured at fair value through profit or loss and not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Equity instruments
The Company subsequently measures all equity investments at fair value. Where the company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the company''s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain or losses in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
5.2 Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment.
5.3 Cash and cash equivalents
In the cash flow statement, cash and cash equivalents includes cash in hand, cheques and drafts in hand, balances with bank and deposits held at call with financial institutions, short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet and forms part of financing activities in the cash flow statement. Book overdrafts are shown within other financial liabilities in the balance sheet and forms part of operating activities in the cash flow statement.
5.4. Impairment of financial assets
The Company assesses impairment based on expected credit losses (ECL) model to the following:
- Financial assets measured at amortized cost
- Financial assets measured at fair value through other comprehensive income Expected credit loss are measured through a loss allowance at an amount equal to :
- The twelve month expected credit losses (expected credit losses that result from those default events on the financial instruments that are possible within twelve months after the reporting date); or
- Full life time expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18, the Company always measures the loss allowance at an amount equal to life time expected credit losses.
6. Financial liabilities
The Company determines the classification of its financial liabilities at initial recognitiion. All financial liabilities are subsequently measured at amortised cost using the effective interest rate method or at fair value through profit or loss. Gains and losses are recognised in the Statement of Profit and loss when the liabilities are derecognised and through the amortisation process. The company derecognises financial liabilities when and only when, the company''s obligations are discharged, cancelled or have expired. An exchange between lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.
6.1. Trade and other payables
Trade and other payables represent liabilities for goods or services provided to the Company prior to the end of financial year which are unpaid.
6.2. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest rate method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
6.3. Foreign exchange gains or losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in profit or loss.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the exchange rate at the end of the reporting period. For financial liabilities that are measured as at fair value through profit or loss, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
7. Cash flow statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future cash receipts or payments and items of income or expense associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. Cash and cash equivalents include cash on hand, cash with banks in current and deposit accounts with necessary disclosure of cash and cash equivalent balances that are not available for use by the Company.
8. Revenue recognition
The Company recognizes revenue when the amount of revenue and its related cost can be reliably measured and it is probable that future economic benefits will flow to the entity and specific criteria in relation to significant risk.
8.1 Sale of goods
Revenue from sale of products is recognised when the products are delivered to the dealer / customer or when delivered to the carrier, when risks and rewards of ownership pass to the dealer / customer, as per terms of contract.
Revenue is measured at the fair value of the consideration received or receivable and net of returns, trade allowances and rebates. It includes excise duty but excludes Value Added Taxes.
8.2 Income from service
Income from services is accounted over the period of rendering of services.
8.2.1 Commission
The commission receivable is recognized on completion of delivery of the machines to the customer directly by our principals and billing is done on a monthly basis.
8.2.2 Erection Charges
Revenue from Erection charges and repair services are recognized on completion of erection / repairs of the machinery at customers mill as per the specifications given by the principals and billing is done to the customers immediately after completion.
9. Other income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably and is accrued on time basis by reference to the principal outstanding and at the effective interest rates applicable. Dividend income is accounted for when the shareholder''s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
10. Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, if any. The cost of Property, plant and equipment includes interest on borrowings attributable to acquisition of qualifying assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition of depreciable assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. Machinery spares which can be used only in connection with an item of Property, plant and equipment and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
Property, plant and equipment acquired and put to use for project purpose are capitalised and depreciation thereon is included in the project cost till commissioning of the project.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the profit or loss.
Transition to Ind AS
For transition to IND AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as of 1st April, 2016 [transition date] measured as per previous GAAP and use that carrying value as its deemed cost as of the transition date.
11. Capital work-in-progress
Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
12. Intangible assets
Intangible assets are stated at cost of acquisition or construction less accumulated depreciation less accumulated impairment, if any.
Transition to Ind AS
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as of 1st April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
13. Depreciation and amortisation
Depreciation has been provided on the straight-line method based on estimated useful lives prescribed in Schedule II to the Companies Act, 2013:
Intangible assets are amortised over their estimated useful life as follows:
The computer software will be amortised over a period of 3 years.
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern. There are no intangible assets having indefinite useful life.
14. Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. The impairment loss, if any, recognised in prior accounting periods is reversed if there is a change in estimates of recoverable amounts.
15. Foreign currencies
15.1 Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee, which is the company''s functional and presentation currency.
15.2 Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss.
16. Employee Benefits
16.1 Short term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
16.2 Other long term employee benefit
The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of the expected future payments to be made in respect of services provided by employee upto the end of reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the period-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the leave as a current liability in the balance sheet to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where Company has the unconditional legal and contractual right to defer the settlement for a period beyond 12 months, the same is presented as non-current liability.
16.3 Post-employment obligation
The Company operates the following post-employment schemes:
a) Defined benefit plans such as gratuity for its eligible employees, and
b) Defined contribution plans such as provident fund.
Defined contribution plan:
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme and pension scheme as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Defined benefit plan
The Company has a gratuity defined benefit plan for its employees. The costs of providing benefits under these plans are determined on the basis of actuarial valuation at each year-end. Separate actuarial valuation is carried out for each plan using the projected unit credit method. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and the balance sheet. The Company has funded this with Life Insurance Corporation of India (''LIC''). The contributions made to the LIC are treated as plan assets. The defined benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as reduced by the fair value of plan assets.
17. Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
18. Segment reporting
An operating segment is a component of the company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the company''s other components and for which discrete financial information is available. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. All operating segments'' operating results are reviewed regularly by the company''s Chief Executive Officer [CEO], who is the Chief Operating Decision Maker [CODM], to make decisions about resources to be allocated to the segments and assess their performance. Information reported to the CODM for the purpose of resource allocation and assessment of segment performance focuses on the type of goods or services delivered or provided. The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the company. Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Income / costs which relate to the company as a whole and are not allocable to segments on a reasonable basis, have been included under unallocated income / costs. Interest income and expenses are not allocated to respective segments. Inter segement pricing is determined on arm''s length basis. The company has three reportable segments viz., Agency, Textiles and Engineering segments. Geographic information is based on business sources from that geographic region. Accordingly, the geographical segments are determined as Domestic, i.e, within India and External i.e outside India.
19. Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
19.1 Current tax
The income tax expenses or credit is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted.
19.2 Deferred tax
Deferred tax is provided in full, using the balance sheet approach, on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences and incurred tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
19.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the income taxes are also recognised in other comprehensive income or directly in equity respectively.
20. Provisions and contingencies
Provisions: Provisions are recognised when there is a present obligation or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are determined by discounting the expected future cash flows at a pre tax rate that reflects current market assessment of the time value of money and the risks specific to the liability.
Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
21. Insurance claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.
22. Earnings per share
Basic earnings per share is computed by dividing the net profit after tax attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.
23. New Amendments issued yet not effective
23.1 Ind AS 115, Revenue from contracts with customers
a. It deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity''s contracts with customers. The standard replaces Ind AS 18 Revenue and Ind AS 11 Construction contracts and related appendices. The new standard is mandatory for financial years commencing on or after 1st April, 2018 and early application is not permitted. The standard permits either a full retrospective or a modified retrospective approach for the adoption.
23.2 Amendments to Ind AS 40 Investment property - Transfers of investment property
a. The amendments clarify that transfers to, or from, investment property can only be made if there has been a change in use that is supported by evidence. A change in use occurs when the property meets, or ceases to meet, the definition of investment property.
b. The Company doesn''t have any investment property and accordingly no impact is envisaged.
23.3 Amendments to Ind AS 12 Income taxes regarding recognition of deferred tax assets on unrealised losses
a. The amendments clarify the accounting for deferred taxes where an asset is measured at fair value and that fair value is below the asset''s tax base.
b. The Company is in the process of evaluating the impact of the standard.
23.4 Notification of Appendix B to Ind AS 21 Foreign currency transactions and advance consideration
a. The MCA has notified Appendix B to Ind AS 21, foreign currency transactions and advance consideration. The appendix clarifies how to determine the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts.
b. The Company has assessed the impact of the above notification and concluded that there is no impact on the above.
Mar 31, 2017
24. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under historical Costing Convention, with revenues recognized and expenses accounted on their accrual including provisions/adjustments for committed obligations and amounts determined as receivable or payable during the year as a going concern basis.
2. Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
3. Inventories
Inventories are valued at lower of cost and net realizable value.
a. The raw materials are valued using identifiable lot cost.
b. Value of finished goods is inclusive of excise duty wherever applicable
c. Cost of finished goods is determined as cost of raw materials and other manufacturing cost. In respect of semi - finished goods cost is taken as cost of the materials and estimated Conversion cost, up to completed stage.
d. Stores, Spares and Components are valued at weighted average cost.
e. By- Products and waste are valued at net realizable value.
4. Cash and cash equivalents (for the purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
5. Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
6. Depreciation and amortization
Depreciation has been provided on the straight-line method based on estimated useful lives prescribed in Schedule II to the Companies Act, 2013:
Intangible assets are amortized over their estimated useful life as follows:
The computer software will be amortized over a period of 3 years.
The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern.
7. Revenue recognition
a) Sale of goods
Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude sales tax and value added tax.
b) Sale of Services
1. Commission: The commission receivable is recognized on completion of delivery of the machines to the customer directly by our principals and billing is done on a monthly basis.
2. Wind Energy: Income from sale of wind Energy is recognized on the strength of the statements received from Tamilnadu Generation and Distribution Company Ltd.
3. Erection Charges: Revenue from Erection charges and repair services are recognized on completion of erection / repairs of the machinery at customers mill as per the specifications given by the principals and billing is done to the customers immediately after completion.
8. Other income
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.
9. Fixed Assets
Tangible fixed assets:
Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
Fixed assets acquired and put to use for project purpose are capitalized and depreciation thereon is included in the project cost till commissioning of the project.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
10. Foreign currency transactions and translations
Initial recognition:
Foreign currency transactions are recorded at the prevailing exchange rates at the time of initial recognition.
On Settlement :
Exchange difference arising on final settlement are adjusted and recognized as income or expense in the statement of Profit and Loss. Outstanding balances of monetary items denominated in foreign currency are restated at closing exchange rates and the difference accounted in the statement of profit and loss.
The Company has exercised the option available under the amended AS 11 in respect of Foreign currency loans availed for acquisition of capital assets and capitalized the exchange rate fluctuation during the year.
11. Investments
Investments being long term are stated at cost inclusive of all expenses incidental to acquisition. Provision for diminution in their market value is made only if such decline is other than temporary.
12. Employee benefits
Short term employee benefits (other than termination benefits) which are payable with in twelve months after the end of the period in which the employees render the service are accounted on accrual basis.
Defined contribution plans:
Company''s contribution paid/ payable during the year to provident fund is recognized in the statement of profit and loss.
Defined benefit plan:
The gratuity payable to the employees is covered by a Master policy taken out with Life Insurance Corporation of India under its Group Gratuity Scheme and the company has opted for the Cash Accumulation Method. Earned leave provision has been made as per AS 15.(Revised).
13. Borrowing costs
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalization of such asset is added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
14. Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under âunallocated revenue / expenses / assets / liabilitiesâ.
15. Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.
16. Taxes on income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realize such assets. Deferred tax assets are recognized for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their reliability.
17. Impairment of assets
The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, except in case of revalued assets.
18. Provisions and contingencies
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.
19. Insurance claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.
20. Input credit
The input credit on Central Excise, Service Tax and TNVAT are accounted for in the books in the period in which the underlying service/goods received are accounted and when there is no uncertainty in availing / utilizing the credits. Out of the credits available on capital goods, 50 % of the amount is taken in the financial year in which capital goods are received and balance 50% in the subsequent year.
Mar 31, 2016
24. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under historical Costing Convention, with revenues recognized and expenses accounted on their accrual including provisions/adjustments for committed obligations and amounts determined as receivable or payable during the year as a going concern basis.
2. Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
3. Inventories
Inventories are valued at lower of cost and net realizable value.
a. The raw materials are valued using identifiable lot cost.
b. Value of finished goods is inclusive of excise duty wherever applicable
c. Cost of finished goods is determined as cost of raw materials and other manufacturing cost. In respect of semi - finished goods cost is taken as cost of the materials and estimated Conversion cost, up to completed stage.
d. Stores, Spares and Components are valued at weighted average cost.
e. By- Products and waste are valued at net realizable value.
4. Cash and cash equivalents (for the purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
5. Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
6. Depreciation and amortization
Depreciation has been provided on the straight-line method based on estimated useful lives prescribed in Schedule II of the Companies Act, 2013:
Intangible assets are amortized over their estimated useful life as follows:
The computer software will be amortized over a period of 3 years
The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern.
7. Revenue recognition
a) Sale of goods
Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude sales tax and value added tax.
b) Sale of Services
1. Commission: The commission receivable is recognized on completion of delivery of the machines to the customer directly by our principals and billing is done on a monthly basis.
2. Wind Energy: Income from sale of wind energy is recognized on a monthly basis on the strength of the statements received from Tamilnadu Generation and Distribution Company Ltd.
3. Erection Charges: Revenue from Erection charges and repair services are recognized on completion of erection / repairs of the machinery at customers mill as per the specifications given by the principals and billing is done to the customers immediately after completion.
8. Other income
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.
9. Fixed Assets
Tangible fixed assets
Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
Fixed assets acquired and put to use for project purpose are capitalized and depreciation thereon is included in the project cost till commissioning of the project.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
10. Foreign currency transactions and translations
Initial recognition :
Foreign currency transactions are recorded at the prevailing exchange rates at the time of initial recognition.
On Settlement :
Exchange difference arising on final settlement are adjusted and recognized as income or expense in the statement of Profit and Loss. Outstanding balances of monetary items denominated in foreign currency are restated at closing exchange rates and the difference accounted in the statement of profit and loss.
The company has exercised the option available under the amended AS 11 in respect of Foreign currency loans availed for acquisition of capital assets and capitalized the exchange rate fluctuation during the year.
11. Investments
Investments being long term are stated at cost inclusive of all expenses incidental to acquisition. Provision for diminution in their market value is made only if such decline is other than temporary.
12. Employee benefits
Short term employee benefits (other than termination benefits) which are payable with in twelve months after the end of the period in which the employees render the service are accounted on accrual basis.
Defined contribution plans.
Company''s contribution paid/ payable during the year to provident fund is recognized in the statement of profit and loss.
Defined benefit plan.
The gratuity payable to the employees is covered by a Master policy taken out with Life Insurance Corporation of India under its Group Gratuity Scheme and the company has opted for the Cash Accumulation Method. Earned leave provision has been made as per AS 15.(Revised).
13. Borrowing costs
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalization of such asset is added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
14. Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".
15. Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.
16. Taxes on income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realize such assets. Deferred tax assets are recognized for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their reliability.
17. Impairment of assets
The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, except in case of revalued assets.
18. Provisions and contingencies
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.
19. Insurance claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.
20. Input credit
The input credit on Central Excise, Service Tax and TNVAT are accounted for in the books in the period in which the underlying service/goods received are accounted and when there is no uncertainty in availing / utilizing the credits. Out of the credits available on capital goods, 50 % of the amount is taken in the financial year in which capital goods are received and balance 50% in the subsequent year.
Mar 31, 2015
1. Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 2013. The financial
statements have been prepared under historical Costing Convention, with
revenues recognized and expenses accounted on their accrual including
provisions/adjustments for committed obligations and amounts determined
as receivable or payable during the year as a going concern basis.
2. Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ from these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
3. Inventories
Inventories are valued at lower of cost and net realisable value.
a. The raw materials are valued using identifiable lot cost.
b. Value of finished goods is inclusive of excise duty wherever
applicable.
c. Cost of finished goods is determined as cost of raw materials and
other manufacturing cost. In respect of semi - finished goods cost is
taken as cost of the materials and estimated Conversion cost, up to
completed stage.
d. Stores, Spares and Components are valued at weighted average cost.
e. By- Products and waste are valued at net realizable value.
4. Cash and cash equivalents (for the purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
5. Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
6. Depreciation and amortisation
Depreciation has been provided on the straight-line method based on
estimated useful lives prescribed in Schedule II to the Companies Act,
2013:
Intangible assets are amortised over their estimated useful life as
follows:
The computer software will be amortised over a period of 3 years.
The estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation method is revised to reflect the changed pattern.
7. Revenue recognition
a) Sale of goods
Sales are recognized, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added tax.
b) Sale of Services
1. Commission: The commission receivable is recognized on completion of
delivery of the machines to the customer directly by our principals and
billing is done on a monthly basis.
2. Wind Energy: Income from sale of wind Energy is recognized on a
monthly basis on the strength of the statements received from Tamilnadu
Generation and Distribution Company Ltd.
3. Erection Charges: Revenue from Erection charges and repair services
are recognized on completion of erection / repairs of the machinery at
customers mill as per the specifications given by the principals and
billing is done to the customers immediately after completion.
8. Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
9. Fixed Assets
Tangible fixed assets
Fixed assets are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. Machinery spares which can be
used only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
Fixed assets acquired and put to use for project purpose are
capitalised and depreciation thereon is included in the project cost
till commissioning of the project.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
10. Foreign currency transactions and translations
Initial recognition
Foreign currency transactions are recorded at the prevailing exchange
rates at the time of initial recognition.
On Settlement
Exchange difference arising on final settlement are adjusted and
recognised as income or expense in the statement of Profit and Loss.
Outstanding balances of monetary items denominated in foreign currency
are restated at closing exchange rates and the difference accounted in
the statement of profit and loss.
The Company has exercised the option available under the amended AS 11
in respect of Foreign currency loans availed for acquisition of capital
assets and capitalized the exchange rate fluctuation during the year.
11. Investments
Investments being long term are stated at cost inclusive of all
expenses incidental to acquisition. Provision for diminution in their
market value is made only if such decline is other than temporary.
12. Employee benefits
Short term employee benefits (other than termination benefits) which
are payable with in twelve months after the end of the period in which
the employees render the service are accounted on accrual basis.
Defined contribution plans.
Company's contribution paid/ payable during the year to provident fund
is recognized in the statement of profit and loss.
Defined benefit plan.
The gratuity payable to the employees is covered by a Master policy
taken out with Life Insurance Corporation of India under its Group
Gratuity Scheme and the company has opted for the Cash Accumulation
Method. Earned leave provision has been made as perAS 15.(Revised).
13. Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
14. Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which
are primarily determined based on market / fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under "unallocated revenue / expenses / assets /
liabilities".
15. Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year.
16. Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same governing tax laws
and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
realisability.
17. Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
18. Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
19. Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
20. Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
Mar 31, 2013
1. Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956.The financial statements
have been prepared on accrual basis under the historical cost
convention. The accounting policies adopted in the preparation of the
financial statements are consistent with those followed in the previous
year.
2. Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ from these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
3. Inventories
Inventories are valued at lower of cost and net realisable value.
a. The raw materials are valued using identifiable lot cost.
b. Value of finished goods is inclusive of excise duty wherever
applicable
c. Cost of finished goods is determined as cost of raw materials and
other manufacturing cost. In respect of semi - finished goods cost is
taken as cost of the materials and estimated conversion cost, up to
completed stage.
d. Stores Spares and Components are valued at weighted average cost.
e. By- Products and waste are valued at net realizable value.
4. Cash and cash equivalents (for the purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
5. Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
6. Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule
XIV to the Companies Act, 1956:
Assets costing less than Rs. 5,000 each are fully depreciated in the
year of capitalisation.
Intangible assets are amortised over their estimated useful life as
follows:
The computer software will be amortised over a period of 7 years.
The estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation method is revised to reflect the changed pattern.
7. Revenue recognition
a) Sale of goods
Sales are recognized, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added tax.
b) Sale of Services
1. Commission: The commission receivable is recognized on completion
of delivery of the machines to the customer directly by our principals
and billing is done on a monthly basis.
2. Wind Energy: Income from sale of wind Energy is recognized on a
monthly basis on the strength of the statements received from Tamilnadu
Generation and Distribution Company Ltd.
3. Erection Charges: Revenue from Erection charges and repair services
are recognized on completion of erection / repairs of the machinery at
customers mill as per the specifications given by the principals and
billing is done to the customers immediately after completion.
8. Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
9. Fixed Assets
Tangible fixed assets
Fixed assets are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. Machinery spares which can be
used only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
Fixed assets acquired and put to use for project purpose are
capitalised and depreciation thereon is included in the project cost
till commissioning of the project.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
10. Foreign currency transactions and translations
Initial recognition
Foreign currency transactions are recorded at the prevailing exchange
rates at the time of initial recognition.
On Settlement
Exchange difference arising on final settlement are adjusted and
recognised as income or expenses in the statement of Profit and Loss.
Outstanding balances of monetary items denominated in foreign currency
are restated at closing exchange rates and the difference accounted in
the statement of profit and loss.
The company has exercised the option available under the amended AS 11
in respect of Foreign currency loans availed for acquisition of capital
assets and capitalized the exchange rate fluctuation during the year.
11. Investments
Investments being long term are stated at cost inclusive of all
expenses incidental to acquisition. Provision for diminution in their
market value is made only if such decline is other than temporary.
12. Employee benefits
Short term employee benefits (other than termination benefits) which
are payable with in twelve months after the end of the period in which
the employees render the service are accounted on accrual basis.
Defined contribution plans.
Company''s contribution paid/ payable during the year to provident fund
is recognized in the statement of profit and loss.
Defined benefit plan.
The gratuity payable to the employees is covered by a Master policy
taken out with Life Insurance Corporation of India under its Group
Gratuity Scheme and the Company has opted for the Cash Accumulation
Method. Earned leave provision has been made as per AS 15 (Revised) .
13. Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
14. Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which
are primarily determined based on market / fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under "unallocated revenue / expenses / assets /
liabilities".
15. Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year.
16. Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same governing tax laws
and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
realisability.
17. Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
18. Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
19. Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
20. Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
Mar 31, 2012
1. Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
2. Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation
of the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
3. Inventories
Inventories are valued at lower of cost and net realisable value.
a. The raw materials are valued using identifiable lot cost.
b. Value of finished goods is inclusive of excise duty wherever
applicable.
c. Cost of finished goods is determined as cost of raw materials and
other manufacturing cost.
In respect of semi - finished goods cost is taken as cost of the
materials and estimated conversion cost up to completed stage.
d. Stores, Spares and Components are valued at weighted average cost.
e. By- Products and waste are valued at net realizable value.
4. Cash and cash equivalents (for the purpose of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
5. Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
6. Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956.
Assets costing less than Rs. 5,000 are fully depreciated in the year of
capitalisation.
Intangible assets are amortised over their estimated useful life as
follows:
The computer software will be amortised over a period of 7 years.
The estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation method is revised to reflect the changed pattern.
7. Revenue recognition
a) Sale of goods
Sales are recognized, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added tax.
b) Sale of Services
1. Commission : The commission receivable is recognized on completion
of delivery of the machines to the customer directly by our principals
and billing is done on a monthly basis.
2. Wind Energy: Income from sale of wind energy is recognized on a
monthly basis on the strength of the statements received from Tamilnadu
Generation and Distribution Company Ltd.
3. Erection Charges: Revenue from Erection charges and repair services
are recognized on completion of erection / repairs of the machinery at
customers mill as per the specifications given by the principals and
billing is done to the customers immediately after completion.
8. Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
9. Fixed Assets Tangible fixed assets
Fixed assets are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. Machinery spares which can be
used only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
Fixed assets acquired and put to use for project purpose are
capitalised and depreciation thereon is included in the project cost
till commissioning of the project.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
10. Foreign currency transactions and translations
Initial recognition
Foreign currency transactions are recorded at the prevailing exchange
rates at the time of initial recognition.
On Settlement
Exchange difference arising on final settlement are adjusted and
recognised as income or expenses in the statement of Profit and Loss.
Outstanding balances of monetary items denominated in foreign currency
are restated at closing exchange rates and the difference accounted in
the statement of profit and loss.
The Company has exercised the option available under the amended AS 11
in respect of Foreign currency loans availed for acquisition of capital
assets and capitalized the exchange rate fluctuation during the year.
11. Investments
Investments being long term are stated at cost inclusive of all
expenses incidental to acquisition. Provision for diminution in their
market value is made only if such decline is other than temporary.
12. Employee benefits
Short term employee benefits (other than termination benefits) which
are payable with in twelve months after the end of the period in which
the employees render the service are accounted on accrual basis.
Defined contribution plans.
Company's contribution paid/ payable during the year to provident fund
is recognized in the statement of profit and loss.
Defined benefit plan.
The gratuity payable to the employees is covered by a Master policy
taken out with Life Insurance Corporation of India under its Group
Gratuity Scheme and the Company has opted for the Cash Accumulation
Method. Earned leave provision has been made as per AS 15 (Revised) .
13. Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
14. Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which
are primarily determined based on market / fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under "unallocated revenue / expenses / assets /
liabilities".
15. Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year.
16. Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same governing tax laws
and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
realisability.
17. Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised if the carrying amount of these assets exceeds
their recoverable amount. The recoverable amount is the greater of the
net selling price and their value in use. Value in use is arrived at by
discounting the future cash flows to their present value based on an
appropriate discount factor. When there is indication that an
impairment loss recognised for an asset in earlier accounting periods
no longer exists or may have decreased, such reversal of impairment
loss is recognised in the Statement of Profit and Loss, except in case
of revalued assets.
18. Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
19. Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
20. Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
Mar 31, 2011
1. SYSTEM OF ACCOUNTING:
These Accounts are prepared under historical Costing Convention, with
revenues recognized and expenses accounted on their accrual including
provisions / adjustments for committed obligations and amounts
determined as receivable or payable during the year as a going concern
and in accordance with accounting standards prescribed in the Companies
(Accounting Standards) Rules, 2006 to the extent applicable.
FIXED ASSETS & DEPRECIATION :
Cost of Civil Works is capitalised and pro-rata Depreciation is claimed
only on such area occupied and utilised. On Capital work in progress,
no depreciation is claimed / charged.
Fixed assets are stated at cost net of CENVAT and TNVAT wherever
applicable. Interest on borrowals and the amount of exchange rate
fluctuation on Foreign Currency Term loan availed for acquisition of
fixed assets are capitalised and considered as cost of concerned asset.
The Depreciation on Fixed Assets has been provided on straight line
method at the rates specified in Schedule XIV of the Companies
Amendment Act, 1988 and in respect of those acquired / purchased /
commissioned during the year on pro-rata basis.
Depreciation on the increase in value of fixed assets as a result of
revaluation is recouped from fixed assets revaluation reserve.
2. INVENTORIES-BASIS OF VALUATION:
Inventories are valued at lower of cost and net realisable value.
a. The raw materials are valued using identifiable lot cost.
b. Value of finished goods is inclusive of excise duty wherever
applicable
c. Cost of finished goods is determined as cost of raw materials and
other manufacturing cost. In respect of semi - finished goods cost is
taken as cost of the materials and estimated conversion cost, up to
completed stage.
d. Stores, Spares and Components are valued at weighted average cost.
e. By- Products and waste are valued at net realizable value.
3. EMPLOYEE BENEFITS:
Short term employee benefits (other than termination benefits) which
are payable with in twelve months after the end of the period in which
the employees render the service are accounted on accrual basis.
Defined contribution plans.
Company 's contribution paid/ payable during the year to provident fund
is recognized in the profit and loss account.
Defined benefit plan.
The gratuity payable to the employees is covered by a Master policy
taken out with Life Insurance Corporation of India under its Group
Gratuity Scheme and the Company has opted for the Cash Accumulation
Method. Earned leave provision has been made as per AS 15 (Revised).
4. INVESTMENTS:
Investments are valued at cost. A reserve has been created for
diminution in value of individual investment to recognize decline in
value of the investments.
5. FOREIGN CURRENCY TRANSACTIONS:
Income on export sales has been accounted on the basis of exchange rate
prevailing on the date of transaction. Difference, if any, between the
amount accounted and actual amount realised on account of fluctuation
in exchange rate has been accounted and charged / credited to the
Profit & Loss A/c. The Foreign Exchange Fluctuations on account of
receivables in export sales has been transferred to foreign exchange
fluctuation account.
The import of goods are accounted on the date of receipt of goods using
exchange rate prevailing on the date of transaction. The difference
between the amount actually paid and accounted is charged to Profit &
Loss Account. The Foreign Exchange Fluctuation on account of payables
has been transferred to Foreign Exchange Fluctuation Account
The Company has exercised the option available under the amended AS 11
in respect of Foreign currency loans availed for acquisition of capital
assets and capitalized the exchange rate fluctuation during the year.
6. IMPAIRMENTOFASSETS.
An asset is treated as impaired when the carrying amount of the asset
exceeds its estimated recoverable value. Carrying amounts of fixed
assets are reviewed at each balance sheet date to determine indication
of impairment of those assets and charged to profit and loss account as
prescribed in AS 28.
7. LEASES.
In the case of operating lease, lease rentals are recognized as an
expense in the profit and loss account as per the lease terms in the
year in which it is incurred.
8. TAXATION:
The Current Income tax is provided using the rates applicable for the
year.
Deferred tax for timing differences between tax profits and book
profits is accounted for, using the tax rates and laws that have been
enacted or subsequently enacted as of the Balance Sheet date.
Mar 31, 2010
1. SYSTEM OF ACCOUNTING:
These Accounts are prepared under historical Costing Convention, with
revenues recognized and expenses accounted on their accrual including
provisions / adjustments for committed obligations and amounts
determined as receivable or payable during the year as a going concern
and in accordance with accounting standards prescribed in the Companies
(Accounting Standards) Rules, 2006 to the extent applicable.
FIXED ASSETS & DEPRECIATION :
Cost of Civil Works is capitalised and pro-rata Depreciation is claimed
only on such area occupied and utilised. On Capital work in progress,
no depreciation is claimed / charged.
Fixed assets are stated at cost net of cenvat and tnvat wherever
applicable. Interest on borrowals and the amount of exchange rate
fluctuation on Foreign Currency Term loan availed for acquisition of
fixed assets are capitalised and considered as cost of concerned asset.
The Depreciation on Fixed Assets has been provided on straight line
method at the rates specified in Schedule XIV of the Companies
Amendment Act, 1988 and in respect of those acquired / purchased /
commissioned during the year on pro-rata basis.
Depreciation on the increase in value of fixed assets as a result of
revaluation is recouped from fixed assets revaluation reserve.
2. INVENTORIES-BASIS OF VALUATION:
Inventories are valued at lower of cost and net realisable value.
a. The raw materials are valued using identifiable lot cost.
b. Value of finished goods is inclusive of excise duty wherever
applicable
c. Cost of finished goods is determined as cost of raw materials and
other manufacturing cost. In respect of semi - finished goods cost is
taken as cost of the materials and estimated conversion cost, up to
completed stage.
d. Stores, Spares and Components are valued at weighted average cost.
e. By- Products and waste are valued at net realizable value.
3. EMPLOYEE BENEFITS:
Short term employee benefits (other than termination benefits) which
are payable with in twelve months after the end of the period in which
the employees render the service are accounted on accrual basis.
Defined contribution plans.
Company s contribution paid/ payable during the year to provident fund
is recognized in the profit and loss account.
Defined benefit plan.
The gratuity payable to the employees is covered by a Master policy
taken out with Life Insurance Corporation of India under its Group
Gratuity Scheme and the Company has opted for the cash Accumulation
Method. Earned leave provision has been made as per AS 15 (Revised).
4. INVESTMENTS:
Investments are valued at cost. A reserve has been created for
diminution in value of individual investment to recognize decline in
value of the investments.
5. FOREIGN CURRENCY TRANSACTIONS:
Income on export sales has been accounted on the basis of exchange rate
prevailing on the date of transaction. Difference, if any, between the
amount accounted and actual amount realised on account of fluctuation
in exchange rate has been accounted and charged / credited to the
Profit & Loss Account. The Foreign Exchange Fluctuations on account of
receivables in export sales has been transferred to foreign exchange
fluctuation account.
The import of goods are accounted on the date of receipt of goods using
exchange rate prevailing on the date of transaction. The difference
between the amount actually paid and accounted is charged to Profit &
Loss Account. The Foreign Exchange Fluctuation on account of payables
has been transferred to Foreign Exchange Fluctuation Account
The Company has exercised the option available under the amended AS 11
in respect of Foreign currency loans availed for acquisition of capital
assets and capitalized the exchange rate fluctuation during the year.
6. IMPAIRMENT OF ASSETS.
An asset is treated as impaired when the carrying amount of the asset
exceeds its estimated recoverable value. Carrying amounts of fixed
assets are reviewed at each balance sheet date to determine indication
of impairment of those assets and charged to Profit & Loss Account as
prescribed in AS 28..
7. LEASES.
In the case of operating lease, lease rentals are recognized as an
expense in the Profit & Loss Account as per the lease terms in the year
in which it is incurred.
8. TAXATION:
The Current Income tax is provided using the rates applicable for the
year.
Deferred tax for timing differences between tax profits and book
profits is accounted for, using the tax rates and laws that have been
enacted or subsequently enacted as of the Balance Sheet date.
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